Monthly Treasury Average Index - MTA Index

Filed Under: ,
Dictionary Says

Definition of 'Monthly Treasury Average Index - MTA Index'


The 12-month moving average of the one-year constant maturity treasury (CMT) used as an index for adjustable rate mortgages. The index is calculated by adding the 12 most recent monthly CMT values and dividing by 12. Since the MTA index is a moving average it has a lag effect. In other words, when the 12 monthly CMT values used to calculate the average are sequentially increasing, the current MTA value will not be as high as the current CMT value, and visa versa when the CMT values are sequentially falling.

Investopedia Says

Investopedia explains 'Monthly Treasury Average Index - MTA Index'


Some mortgages, such as payment option arms, offer the borrower a choice of indexes. This choice should be made with some analysis. The interest rate on an adjustable rate mortgage is known as the fully indexed interest rate - it equals the index value plus the margin. While the index is variable, the margin is fixed for the life of the mortgage. Different indexes have relative values which historically are quite constant within a certain range. For example, the MTA index is typically lower than the one month LIBOR index by about .1% to .5%. When considering which index is most economical, don't forget about the margin. The lower an index relative to another index, the higher the margin is likely to be.

comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
Trading Center